fx

Table of Contents
Procedure for Exploration 3
Introduction 4
Gold Regression Models7
 Polynomial Regression Model
 Exponential Regression Model
 Growth Regression Model

Silver Regression Models 13

 Polynomial Regression Model
 Exponential Regression Model
 Growth Regression Model

Predictions 20
Conclusion 21

2
Procedure for Exploration

1st 2nd 3rd

Writing the
introduction
Research for the
Stage Stage
Data Stage
Constructing
Selecting the Graphs and
topic Calculations
Area of
Mathematics to Presentation
be Explored

3
Introduction
The prices of gold and silver keep changing with the time period. Ten years ago, it was easy and
less expensive for people to invest in gold or silver. But, with the shooting prices and the
constantly changing market trends for these metals, it is hard to say whether or not it will be
profitable to invest in either of the metals. These changes in trend and markets of these metals
are due to a number of factors.

Such as:

1) Large traders or investors

2) Short selling
3) Industrial, commercial and consumer demand
4) Hedge against financial stress

I have assessed the trends of gold and silver and the price fluctuations from the past 10 years. On
the basis of that, I have constructed my portfolio on these trends and analyzed the different
charts of gold and silver from 2004 to 2013 in order to model them in a way which might
calculate the future trends of these metals and whether or not investment in either of the metals
will profit an individual.

Graphing and Displaying

Record of 10 years gold prices (per 10 gram)- Table 1

S.no. Years Rate (INR)

1 2004 Rs. 5800
2 2005 Rs. 7000
3 2006 Rs. 9000

4
4 2007 Rs. 10800
5 2008 Rs. 12500
6 2009 Rs. 14500
7 2010 Rs. 18000
8 2011 Rs. 25000
9 2012 Rs. 32000
10 2013 Rs. 29000
1

Based on the above table, I constructed a bar graph using ‘Microsoft Excel’. On the ‘X’ axis I have
taken the price of gold (INR) and on the ‘Y’ axis I have taken the different years, from 2004 to
2013.

10 years gold price trends

35000
30000
25000
Gold Pricces(INR)

20000
15000
10000
5000
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Years

The above graph shows the increase in the prices of gold from 2004, each year the price
increases till 2012 but in the year 2013 from 32000 it drops down to 29000.

1
"Gold Price History." N.p., n.d. Web. <http://career-job-openings-in-india.blogspot.in/2012/10/yearly-gold-price-
chart-in-india-last.html>.

5
Silver 10years price(per 10 gram) - Table 2

S.no Years Rate (INR)

1 2004 Rs. 117.7
2 2005 Rs. 106.75
3 2006 Rs. 174.05
4 2007 Rs.195.2
5 2008 Rs. 236.25
6 2009 Rs.221.65
7 2010 Rs.272.85
8 2011 Rs.547.9
9 2012 Rs.577
10 2013 Rs.438.33
2

Based on the above table I have constructed a bar graph using ‘Microsoft Excel’. On the ‘X’ axis I
have taken the price of gold (INR) and on the ‘Y’ axis I have taken the different years, from 2004
to 2013.

2
"Silver Price History." N.p., n.d. Web. <http://bse2nse.com/metals-ex-gold/2057-live-silver-price-chart-india-inr-kg-
historical.html>.

6
 10 years silver pice trends
700

600

500
Silver Prices (INR)

400

300

200

100

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Years

The above graph has been constructed using Microsoft Excel, the price decreases in 2005 and
then a further increase till 2008 with a slight drop in 2009 and then shoots up from 2010 onwards
till 2012, but as the gold price dropped in 2013 so did the silver price from Rs. 577 to Rs. 438 in
2013.

Using the data given in the 1 st table, I constructed a graph using ‘Geogebra’ of the 10 years gold
price data. I then took out the three best regression models out of the graph that had been
plotted. The prices of gold from the 10 year data collected in table no 1 was taken on the ‘X’ axis
in my formulation.

7
Polynomial Model

As the data of gold displays the prices increasing each year, I forecasted that the most suitable
regression model will be the polynomial graph and the most suitable line of best fit. The equation
that came out using ‘Geogebra’ of Polynomial was 221.2121(x) 2+520.6061(x) 2+4980. Below is the
difference between the original price of gold and the values that have been derived from the
equation of polynomial of the above graph. A percentage difference was then taken using the
formula below.

Difference
× 100 .
Original Price (INR)

For Example: For the year 2004 the rate was Rs. 5800

78.1818
So, the difference between 5800-5721.82 = 78.1818 ×100 = -57.0219
5800

8
Table 3

S.no Year Price Polynomial Difference Percentage

(INR) Difference
1 2004 Rs. 221.2121(1)2+520.6061(1)2+4980= 5721.82 78.1818 -57.0219
5800
2 2005 Rs. 221.2121(2)2+520.6061(2)2+4980=6906.06 93.9394 1.341991
7000
3 2006 Rs. 221.2121(3)2+520.6061(3)2+4980=8532.73 467.2727 5.191919
9000
4 2007 Rs. 221.2121(4)2+520.6061(4)2+4980= 10601.82 198.1818 1.835017
10800
5 2008 Rs. 221.2121(5)2+520.6061(5)2+4980= 13113.33 -613.333 -4.90667
12500
6 2009 Rs. 221.2121(6)2+520.6061(6)2+4980=16067.27 -1567.27 -10.8088
14500
7 2010 Rs. 221.2121(7)2+520.6061(7)2+4980=19463.64 -1463.64 -8.13131
18000
8 2011 Rs. 221.2121(8)2+520.6061(8)2+4980=23302.42 1697.576 6.790303
25000
9 2012 Rs. 221.2121(9)2+520.6061(9)2+4980=27583.64 4416.364 13.80114
32000
10 2013 Rs. 221.2121(10)2+520.6061(10)2+4980=32307.27 -3307.27 -11.4044
29000
Average Difference: -6.33127

9
Exponential Model

The next best model that I thought was appropriate for my calculations was exponential. The
equation that came out from this line of best fit graph was y = 4847.713e e0.1934 (x)

For this regression model, I also calculated the difference and percentage difference for the
record of 10 years gold prices in (INR). The results of the calculations are shown in the table
below.

10
Table 4

S.no Year Price (INR) Exponential Difference Percentage

Difference
1 2004 Rs. 5800 4847.713 e0.1934(1) = 5882.13 -82.1269 -1.41598
2 2005 Rs. 7000 4847.713 e0.1934(2) = 7137.27 -137.266 -1.96094
3 2006 Rs. 9000 4847.713 e0.1934(3) = 8660.23 339.7713 3.775237
4 2007 Rs. 10800 4847.713 e0.1934(4) = 291.8358 2.702183
10508.16
5 2008 Rs. 12500 4847.713 e0.1934(5) = -250.415 -2.00332
12750.42
6 2009 Rs. 14500 4847.713 e0.1934(6) = -971.122 -6.6974
15471.12
7 2010 Rs. 18000 4847.713 e0.1934(7) = -772.379 -4.29099
18772.38
8 2011 Rs. 25000 4847.713 e0.1934(8) = 2221.937 8.887746
22778.06
9 2012 Rs. 32000 4847.713 e0.1934(9) = 4361.512 13.62972
27638.49
10 2013 Rs. 29000 4847.713 e0.1934(10) = -4536.04 -15.6415
33536.04
Average -0.30152

Difference=

11
Growth Model

Lastly, the third regression model that fit best into my formulation was growth. Using ‘Geogebra’
I had constructed polynomial, exponential and growth as these were the three best and other
regression models did not fit in and did not touch maximum points on the line of best fit.
However, in the growth model the equation that came out was y=4847.713*1.2134(x).

Even though the equation of growth is different than that of exponential the values that came
out after inserting the data of gold were the same as exponentials values. Hence, the difference
and the percentage difference that came out were exactly like exponential.

12
Table 5

S.no Year Price (INR) Growth Difference Percentage

Difference
1 2004 Rs. 5800 4847.713*1.2134(1) = 5882.13 -82.1269 -1.41598
2 2005 Rs. 7000 4847.713*1.2134(2) = 7137.27 -137.266 -1.96094
3 2006 Rs. 9000 4847.713*1.2134(3) = 8660.23 339.7713 3.775237
4 2007 Rs. 10800 4847.713*1.2134(4) = 291.8358 2.702183
10508.16
5 2008 Rs. 12500 4847.713*1.2134(5) = -250.415 -2.00332
12750.42
6 2009 Rs. 14500 4847.713*1.2134(6) = -971.122 -6.6974
15471.12
7 2010 Rs. 18000 4847.713*1.2134(7) = -772.379 -4.29099
18772.38
8 2011 Rs. 25000 4847.713*1.2134(8) = 2221.937 8.887746
22778.06
9 2012 Rs. 32000 4847.713*1.2134(9) = 4361.512 13.62972
27638.49
10 2013 Rs. 29000 4847.713*1.2134(10) = -4536.04 -15.6415
33536.04
Average -0.30152

Difference=

13
I then used the data of Silver to construct different regression models.

Silver 10years prices.

Table 6

S.no Years Rate (INR)

1 2004 Rs. 117.7
2 2005 Rs. 106.75
3 2006 Rs. 174.05
4 2007 Rs.195.2
5 2008 Rs. 236.25
6 2009 Rs.221.65
7 2010 Rs.272.85
8 2011 Rs.547.9
9 2012 Rs.577
10 2013 Rs.438.33

14
Polynomial Model

The first model I used was polynomial as the results that came out were the most suitable in
order to further formulate my data. Also, during the modeling of my Gold data the best model
was polynomial. The graph that is shown below has been constructed using ‘Geogebra’. The
equation that came out from this regression model for this graph is y = 2.8257(x) 2 + 19.0085 (x) +
75.4323. I then took out the difference and percentage difference that is shown in the table
below.

15
Table 7

S.no Years Price (INR) Polynomial Difference Percenta

ge
Differenc
e
1 2004 Rs. 117.7 2.8257(1)2 + 19.0085 (1) + 75.4323= -20.8506 -17.715
97.27
2 2005 Rs. 106.75 2.8257(2)2 + 19.0085 (2) + 75.4323= -4.2408 -3.97265
124.75
3 2006 Rs. 174.05 2.8257(3)2 + 19.0085 (3) + 75.4323= 50.5643 29.05159
157.89
4 2007 Rs.195.2 2.8257(4)2 + 19.0085 (4) + 75.4323= 28.9942 14.85359
196.68
5 2008 Rs. 236.25 2.8257(5)2 + 19.0085 (5) + 75.4323= 6.9284 2.932656
241.12
6 2009 Rs.221.65 2.8257(6)2 + 19.0085 (6) + 75.4323= -81.3535 -36.7036
291.21
7 2010 Rs.272.85 2.8257(7)2 + 19.0085 (7) + 75.4323= -104.572 -38.3258
346.95
8 2011 Rs.547.9 2.8257(8)2 + 19.0085 (8) + 75.4323= 105.1524 19.1919
408.34
9 2012 Rs.577 2.8257(9)2 + 19.0085 (9) + 75.4323= 87.8493 15.22518
475.39
10 2013 Rs.438.33 2.8257(10)2 + 19.0085 (10) + -68.4718 -15.6211
75.4323= 548.09
Average -3.10832

Difference=

16
Exponential Model

The next best regression model for silver was exponential constructed using the same technology
as the previous graphs. The equation that came out for this model was y = 89.9027 e0.1838(x). For
this model as well, I took out the difference and the percentage difference.

17
S.no Years Price (INR) Exponential Difference Percentage
Difference
1 2004 Rs. 117.7 89.9027 e0.1838(1) = 9.662 8.209006
108.04
2 2005 Rs. 106.75 89.9027 e0.1838(2) = -23.0816 -21.6221
129.83
3 2006 Rs. 174.05 89.9027 e0.1838(3) = 18.0286 10.35829
156.02
4 2007 Rs.195.2 89.9027 e0.1838(4) = 7.7057 3.947592
187.49
5 2008 Rs. 236.25 89.9027 e0.1838(5) = 10.934 4.628148
225.32
6 2009 Rs.221.65 89.9027 e0.1838(6) = -49.1171 -22.1598
270.77
7 2010 Rs.272.85 89.9027 e0.1838(7) = -52.5367 -19.2548
325.39
8 2011 Rs.547.9 89.9027 e0.1838(8) = 156.8757 28.63218
391.02
9 2012 Rs.577 89.9027 e0.1838(9) = 107.0976 18.56111
469.90
10 2013 Rs.438.33 89.9027 e0.1838(10) = -126.362 -28.828
564.70
Average -1.75284

Difference=

18
Logistic Model

The last regression model that I used to model the prices of silver was logistic. After polynomial
and exponential, logistic was the best model to formulate my data and had touched the
maximum points on the graph. Also, except these three models other regression models did not
touch any more than 1-2 points which would not have been appropriate for my further
calculations for taking out the difference and percentage difference.

19
Table 9

S.no Years Price (INR) Logistic Difference Percentage

Difference
1 2004 Rs. 117.7 727.6081 35.4927 30.15523
=
1+ 11.0387 e−0.3408(1)
82.21
2 2005 Rs. 106.75 727.6081 -3.7672 -3.52899
=
1+ 11.0387 e−0.3408(2)
110.52
3 2006 Rs. 174.05 727.6081 27.6848 15.90623
−0.3408(3 ) =
1+ 11.0387 e
146.37
4 2007 Rs.195.2 727.6081 4.9474 2.534529
−0.3408(4) =
1+ 11.0387 e
190.26
5 2008 Rs. 236.25 727.6081 -5.5827 -2.36305
=
1+ 11.0387 e−0.3408(5 )
241.83
6 2009 Rs.221.65 727.6081 -77.9457 -35.1661
=
1+ 11.0387 e−0.3408(6 )
299.60
7 2010 Rs.272.85 727.6081 -88.0552 -32.2724
−0.3408(7 ) =
1+ 11.0387 e
360.91
8 2011 Rs.547.9 727.6081 125.5201 22.90931
−0.3408(8 ) =
1+ 11.0387 e
422.38
9 2012 Rs.577 727.6081 96.3979 16.70674
−0.3408(9 ) =
1+ 11.0387 e
480.80
10 2013 Rs.438.33 727.6081 -94.5096 -21.5613
=
1+ 11.0387 e−0.3408(10)

20
 532.84
Average -0.66798

Difference=

After modeling the graphs and the line of best fit for both gold and silver, I constructed
predictions for both Gold and silver by using ‘Geogebra’ in order to know which metal will be
profitable for investment in the future.

PREDICTIONS-
Gold prices for the next 5 years- Table 10

S.no Year Rate (INR)

1 2014 Rs.37473.3333
2 2015 Rs.43081.8182
3 2016 Rs.49132.7273
4 2017 Rs.55626.0606
5 2018 Rs.62561.8182
Above is the table for the next 5 years of predictions after 2013. I had taken a data of 10 years, to
take out the predictions for the next 5 years after 2013 I used ‘Geogebra’ and the model of
polynomial. I took out the prediction by putting values in ‘X’ using technology, which gave me the
results.

Silver prices for the next 5 years- Table 11

21
S.no Year Rate (INR)
1 2014 Rs. 626.43
2 2015 Rs. 710.43
3 2016 Rs. 800.08
4 2017 Rs. 895.39
5 2018 Rs. 996.34

I used ‘Geogebra’ to construct the prediction for prices (INR) of silver for the next five years using
the polynomial regression model, which gave me the results shown in the above table.

Conclusion-
After constructing regression models and comparing the prices of gold and silver per 10gram
from the past 10 years I had based my predictions for the next five years. Using which I would like
to conclude that the most profitable investment would be gold as the price of silver increases
slowly and is not very profit oriented as the market of silver is lower than that of gold. Looking at
the current trends and predictions people are likely to invest more in gold than in silver. Before
constructing the regression models the previous trends portrayed that the price of gold had
decreased in 2013, but my predictions state that after 2013 that is from the year2014 onwards
the price of gold per (10 gram) will increase. With this increase in the metal gold the market will
gain huge profits as the investment in gold is likely to increase as the return that will be received
on this metal will be very high, which will lead to a boom in the market of gold and in the
economy of India. I based my further research on an article from Forbes which showed that the
investors are less likely to invest in gold due to the fall in the price of 2013, however, my
predictions show that the price will increase, the investors also have the same point of view and
are actively looking at the gold and silver charts with relation to the macroeconomic scenario as a

22
whole. Also, they believe that technical analytical methods are usually right and that the
investors should base their investment opinion after analyzing the technical analysis. 3

Lastly, the problems that I faced during my exploration were that at some point of time I had
taken incorrect values which led me to analyze the wrong data and constructing the wrong
graphs, due to which my further calculations were misinterpreted.

Bibliography:

1. "Gold Price History." N.p., n.d. Web.

2. “Silver Price History." N.p., n.d. Web.
3. “Gold Image."- Search." Gold Images - Google Search. N.p., n.d. Web.
4. "Silver Images - Google Search." Silver Images - Google Search. N.p., n.d. Web.
5. Colombo, Jesse. "These Charts Hold The Key To Gold And Silver's Next Move." Forbes. Forbes
Magazine, 03 Dec. 2013.

3
Colombo, Jesse. "These Charts Hold The Key To Gold And Silver's Next Move." Forbes. Forbes Magazine, 03 Dec.
2013. Web. <http://www.forbes.com/sites/jessecolombo/2013/12/03/these-charts-hold-the-key-to-gold-and-
silvers-next-move/>.

23